What happened
Week to date, shares of Airbnb (ABNB -1.63%) were up 28% through Thursday's market close, according to data provided by S&P Global Market Intelligence. Airbnb's fourth-quarter earnings report solidified investors' confidence in its growth prospects. The stock is now up 63% year to date, but it could still head higher over the next several years as Airbnb continues to grow its supply of active listings on the platform.
So what
Investors were impressed by the company's robust growth through a challenging economic environment. Looking back over three years, Airbnb's annual revenue has grown 75%. The company generated a $1.9 billion net profit last year on $8.4 billion of revenue, putting it on a solid financial footing.
It's a good sign for the near-term growth outlook that Airbnb is seeing strong demand in urban areas. Airbnb reported that nights and experiences booked increased by 20% year over year to 88 million in the fourth quarter. Management credited this growth to the return of urban and cross-border travel, which was the company's "bread and butter" before the pandemic. This is while non-urban areas grew even faster, with nights booked increasing 49% over the year-ago quarter.
Data by YCharts
Now what
Airbnb is seeing the demand carry over to the current quarter. Management is focused on making the hosting experience as easy as possible to continue growing its supply of listings, which ended the year with 900,000 more listings than the start of 2022, excluding China. The growth in listings is an advantage for Airbnb and should continue to be a growth driver as travel demand picks up.
The stock trades at a high valuation after the year-to-date surge, so investors should temper their return expectations for the rest of the year. However, it's the long term that counts, and Airbnb's growing platform should deliver satisfactory returns for patient investors.
